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Thursday, August 12, 2010

The hockey world changed in 2005 and it had nothing to do with the NHL lockout that cost owners, players and fans the 2004-05 season. Starting with the Crosby draft lottery of 2005 which signaled the end of hostilities between the NHL and NHLPA, teams began a broad, calculated and intentional shift away from drafting European players.

Teams across the league re-focused their scouting and began drafting more North-American hockey players to stock the NHL of tomorrow. How dramatic a shift? Only the Swedish leagues have managed to maintain or increase their average annual crop of NHL draft picks since the lockout.

Looking back at the five draft years preceding the lockout and the six years since has revealed some startling numbers that I haven’t seen discussed in great detail anywhere else. Normally my focus is on the Montreal Canadiens but I believe this subject warrants discussion and should be of interest to hockey fans everywhere.

Down the rabbit hole

So, what’s significant about 2005? That’s the year Russia backed out of the Player Transfer Agreement (PTA) the International Ice Hockey Federation (IIHF) had negotiated with the NHL in 2002. An agreement that regulated the movement of players to and from the NHL which also assured European club teams were compensated $200,000 USD for each player they lost to the NHL.

After three strenuous years without Russia abiding by the IIHF agreement, the Czech Republic also backed out of the PTA in 2008, effectively killing it. Since then, there’s only been a gentleman’s agreement between IIHF members and NHL teams to honour each other’s player contracts with their respective clubs. European teams stopped receiving $200,000 USD payments whose original cash value in 2002 had dropped 32% by 2008.

Meanwhile, Article 26 of the CBA forbid NHL teams from negotiating individually with European clubs for the release of their players. At first glance, one would think not having to pay $200,000 for the release of players would increase the number of European players being drafted by NHL teams but in fact the opposite happened:

Sweden is the only major European country whose leagues experienced an increase in the average number of prospects drafted, up 21% since the lockout. Every other league known for producing NHL calibre talent; Russia, Finland, the Czech Republic and Slovakia all experienced massive reductions. Even the collective of smaller leagues which the NHL used to draft from; Switzerland, Germany, Latvia, Slovenia, Belarus etc, also saw a heavy decline in the post lockout era.

Of course, news that the KHL negatively impacted the NHL is neither new nor surprising but few may have realized the shift away from Europe extends far beyond Russia and began before the KHL even existed. Within Russia, the decline has been magnified, primarily by the creation of the Russian Superleague which preceded the KHL.

NHL teams drafted 39 players from Russia in 2000 but just 4 in 2010, a decline of 90% within a decade. That decline accelerated when Russia backed out of the transfer agreement in 2005 and it appears it’s only a matter of time now before we see an NHL draft where no players are selected from the Russian leagues. The last time that happened was 1981, when Russia was mired in Afghanistan and Ronald Reagan was in the White House.

Finland is down 45%, producing just half the draft picks it did during the pre-lockout years. A sharp decline to be sure, but at least it’s stable in terms of recent numbers. The Czech Republic on the other hand has dropped 65% and it’s actually worse than that. Since 2007, an average of just 1.5 players have been drafted from the Czech Republic annually, leading me to believe the NHL knew they’d be pulling out of the PTA the following year and adjusted accordingly.

Slovakia is the last of the major contributors, down almost 70% while the collective of smaller leagues also declined nearly 50%. Combined, NHL teams now annually draft at least 35 fewer players from the European leagues, a 45% decline in just 6 years. Even if you exclude Russia, it’s still a 33% loss since the lockout.

Another key change in 2005 was the reduction of rounds in the NHL draft from 9 to 7. Some may argue that the majority of Europeans tend to be drafted in the later rounds so the reduced number just reflects the fewer rounds. Not so. Even from 2000 to 2004 there was a 47% decline in the number of Europeans being selected in rounds 8 and 9.

A vacuum must be filled

So, if the NHL is going to Europe far less than before, who’s benefitting from it? Which North American leagues are filling the vacuum in the post-lockout era where uncertainty still exists over the next PTA with the IIHF? And could some of the decline hide the possibility that European prospects are jumping to North America early, hoping to increase their chances of being drafted?

Clearly, a paradigm shift is also underway in the United States where the number of players drafted from the NCAA has dropped more than 50% since the lockout and almost 70% since 2000. Without proper perspective, one might think there’s a major problem within the NCAA and a number of media have written stories on the subject recently, suggesting there's some sort of exodus to Canadian Junior teams who are luring them with cash on the barrel. Those free-market Canadian bastards! Trouble is, most of it is based on close-range perception and few facts.

The most important thing to understand is the number of players being drafted in the US before they even reach college has gone supernova, doubling almost overnight in 2005, the very first draft after the lockout. The days of US kids going to the NCAA, being drafted as a college player and turning pro with a degree are long gone and have been for some time.

Today, more kids than ever are entering the NCAA as drafted NHL prospects and those with a legitimate shot are leaving sooner as a result. For US-born prospects who want to accelerate their development, the typical choice is to join their NHL team's affiliate in the AHL, assuming it's decided to be a viable option, or sign with a Canadian Hockey League team (usually OHL) that drafted their rights.

As for paying players to sign, I fail to see meaningful difference between top-tier US players being offered one-time payments by a CHL team often worth 30-100k, Canadian players being offered partial/full scholarships a by major US college worth 30-50k per year or an average AHL salary north of 60k annually. At least not when kids today become millionaires the moment they sign their first entry level contract and have had "family advisers", code for "Agents" since they were 14... or even earlier.

Regarding the primary focus of this article, players who've just been drafted, all the charts I've provided show there's no exodus of players to either the US or Canada. Any increases appear to be matched coming the other way and one fact can't be ignored:

United States minor league programs now produce more NHL draft picks than any single Canadian league

In short, The NCAA is a victim of US success more than Canadian poaching and should alter their archaic rules, such as not being allowed to attend an NHL training camp to make it more tempting to stay in college. Instead, the NCAA has a rule set that actually encourages it's hockey-playing students to leave school early or not attend at all after being drafted.

Within Canada, the OHL grew by 15% while the WHL appeared to be stable or on the verge of stagnation. The QMJHL also saw a 15% increase which actually hides the fact most of that improvement came from import players from the rest of Canada and Europe. The number of Quebec-born draft picks has actually stagnated while the quality of those picks in the NHL has diminished over the years.

It was my last article, “Crisis in the Q” that got me wondering if more Europeans were also coming over to play in the other North American leagues as well, perhaps minimizing the apparent decline of NHL teams drafting European players. Interestingly enough, Canadian high schools and prep schools, which for the most part have been ignored by the media, have been steadily producing a supply of NHL draft picks since their sudden rise in 2003.

Further down the rabbit hole

To understand what's really happening in North America, I decided to break down the major leagues to get a better perspective on the numbers. Who's benefiting from the NHL exodus from Europe and might European players be coming over in greater numbers sooner, side-stepping the lack of a PTA in the hope of being drafted?

I think it's safe to say most people who cover and watch hockey have taken notice of the United States in recent years but I suspect very few have realized the number and quality of American-born players being drafting has exploded since the lockout, doubling in just 6 years. Meanwhile, the percentage of imports from Canada and Europe increased just 0.4% in that time with just 1 year standing out: 2009, which saw a noticeable increase of Europeans that wasn't followed up in 2010.

Breaking down USA minor hockey further identifies high schools and the US National Team Development Program (Under 18s and 17s) as the primary factors behind the explosion of US-born NHL draft picks.

The number of kids being drafted out of high school has tripled since the lockout while the NTDP has been a stunning success ever since its inception. This dramatic improvement is a clear indication that the USA win at the 2010 WJC in Saskatoon was just a taste of what's to come.

Meanwhile, the USHL has improved 25% while prep schools have been steadily improving as well. Solid numbers across the board which shows United States hockey programs are healthy and thriving.

Having said that, recent discussions have advanced the notion that Canadian Junior teams are bleeding American talent, offering large sums of money to entice them to play north of the border. I can’t comment on where players choose to play post-draft but I can say for a fact, as the charts will show, that this isn’t happening to players pre-draft.

OHL - Breakdown of NHL draft picks

YEAR

NUM

CAN

%

IMP

%

I

USA

EUR

I

CZE

SVK

RUS

SWE

FIN

OTH

2000

33

21

63.6

12

36.4

6

6

3

0

1

0

0

2

2001

36

28

77.8

8

22.2

2

6

2

2

2

0

0

0

2002

30

20

66.7

10

33.3

3

7

3

1

1

0

0

2

2003

37

27

73.0

10

27.0

7

3

2

0

1

0

0

0

2004

37

28

75.7

9

24.3

5

4

1

1

0

0

0

2

2005

43

33

76.7

10

23.3

6

4

2

1

0

0

0

1

2006

29

23

79.3

6

20.7

5

1

0

0

0

0

1

0

2007

35

29

82.9

6

17.1

4

2

0

0

0

0

0

2

2008

46

39

84.8

7

15.2

5

2

1

0

0

0

0

1

2009

45

39

86.7

6

13.3

5

1

0

1

0

0

0

0

2010

42

29

69.0

13

31.0

9

4

1

0

2

0

0

1

2000-04

34.6

24.8

71.7

9.8

28.3

4.6

5.2

2.2

0.8

1.0

0.0

0.0

1.2

2005-10

40.0

32.0

80.0

8.0

20.0

5.7

2.3

0.7

0.3

0.3

0.0

0.2

0.8

+/-

5.4

7.2

-1.8

1.1

-2.9

-1.5

-0.5

-0.7

0.0

0.2

-0.4

%

15.6%

29.0%

-18.4%

23.9%

-55.8%

The OHL exemplifies what's happened in the NHL since 2005. Prior to the lockout, almost 30% of its draft picks were born outside of Canada but today, it's already dropped to 20% while the number of European imports has dropped in half.

The number of US-born players has increased slightly but that number is off-set by a similar increase in Canadians playing south of the border. Again, we see clear indications that not only are fewer players being drafted from Europe, there are fewer coming over as well.

WHL - Breakdown of NHL draft picks

YEAR

NUM

CAN

%

IMP

%

I

USA

EUR

I

CZE

SVK

RUS

SWE

FIN

OTH

2000

31

25

80.6

6

19.4

2

4

2

2

0

0

0

0

2001

38

31

81.6

7

18.4

3

4

2

2

0

0

0

0

2002

40

35

87.5

5

12.5

0

5

4

0

1

0

0

0

2003

33

26

78.8

7

21.2

2

5

2

0

0

0

2

1

2004

36

31

86.1

5

13.9

2

3

0

0

1

0

1

1

2005

43

38

88.4

5

11.6

4

1

0

0

0

0

1

0

2006

24

20

83.3

4

16.7

2

2

1

0

0

0

0

1

2007

37

32

86.5

5

13.5

2

3

2

0

0

1

0

0

2008

37

31

83.8

6

16.2

4

2

0

0

0

0

1

1

2009

31

27

87.1

4

12.9

1

3

1

1

0

0

1

0

2010

43

39

90.7

4

9.3

2

2

1

0

0

0

0

1

2000-04

35.6

29.6

83.1

6.0

1.8

4.2

2.0

0.8

0.4

0.0

0.6

0.4

2005-10

35.8

31.2

87.1

4.7

2.5

2.2

0.8

0.2

0.0

0.2

0.5

0.5

+/-

0.2

1.6

-1.3

0.7

-2.0

-1.2

-0.6

-0.4

0.2

-0.1

0.1

%

0.6%

5.4%

-21.7%

38.9%

-47.6%

When I first looked at the WHL it appeared to be stable at best and to be honest, I was expecting to see a larger increase in the number of draft picks, along the lines of the OHL and the feeder leagues of the United States in the post-lockout era.

Once I dug deeper however, it all made sense. While the WHL has seen a steady flow of US-born imports, it clearly has never been their first choice when picking a Canadian league in which to develop. That said, the number of European imports averages just 1 fewer draft pick annually than the OHL and once again, the number of Europeans being drafted dropped by almost half.

QMJHL - Breakdown of NHL draft picks

YEAR

NUM

QUE

%

IMP

%

I

CAN

USA

EUR

I

CZE

SVK

RUS

SWE

FIN

OTH

2000

16

13

81.3

3

18.8

2

0

1

1

0

0

0

0

0

2001

21

10

47.6

11

52.4

5

0

6

2

1

1

1

0

1

2002

18

12

66.7

6

33.3

2

1

3

1

0

0

0

0

2

2003

30

18

60.0

12

40.0

8

2

2

1

1

0

0

0

0

2004

20

10

50.0

10

50.0

7

0

3

1

1

0

0

0

1

2005

23

14

60.9

9

39.1

3

2

4

0

2

1

0

0

1

2006

26

13

50.0

13

50.0

9

1

3

0

0

1

0

0

2

2007

25

10

40.0

15

60.0

9

1

5

1

1

2

1

0

0

2008

27

19

70.4

8

29.6

6

0

2

0

0

0

0

0

2

2009

23

17

73.9

6

26.1

4

0

2

1

0

1

0

0

0

2010

22

10

45.5

12

54.5

5

0

7

4

0

2

0

0

1

2000-04

21.0

12.6

60.0

8.4

40.0

4.8

0.6

3.0

1.2

0.6

0.2

0.2

0.0

0.8

2005-10

24.3

13.8

56.8

10.5

43.2

6.0

0.7

3.8

1.0

0.5

1.2

0.2

0.0

1.0

+/-

3.3

1.2

2.1

1.2

0.1

0.8

-0.2

-0.1

1.0

0.0

0.0

0.2

%

15.7%

9.5%

25.0%

25.0%

16.7%

26.7%

The QMJHL has been increasingly reliant on players born outside the province, to a point where it's now possible Quebecers may become a minority in their own league as soon as 2015 in terms of NHL draft picks.

The QMJHL seemed to be holding its own but my study on the decline of the “Q” show problems extend beyond mere demographics, as league president Gilles Courteau would have you believe, or how expensive the game has become for Quebec families. Seeing how the other North American leagues have taken advantage of the vacuum created by the NHL's European exodus from all but Sweden and prospered, even during a severe recession, suggests more fundamental problems within Quebec.

Tunnelling down through the data shows that 40% of the 21 draft-pick average from 2000-04 are not Quebec-born, which increased to 43% of the 24.3 draft-pick average from 2005-10. Quebec-born players drafted from the QMJHL rose slightly from 12.6 to 13.8 post lockout, primarily as a result of two bumper crop years in 2008 and 2009 though the percentage of Quebec-born players being drafted actually fell.

In the 2008 draft, just 19 of the 27 players chosen were Quebec-born and of those 19 draft picks, none were taken in the 1st round and 12 were taken after the 3rd round. In 2009, 17 of 23 players were Quebec-born and of those 17 draft picks, 3 were taken at the end of round 1 and 11 players were taken after the 3rd round. Quantity, not quality in bumper crop years.

The NHL of tomorrow - Scouting and drafting strategy

If anything, this study should cast light on the scouting and drafting habits of NHL teams since the lockout, and put the drafting strategy of teams like the Montreal Canadiens into proper perspective. Fewer European scouts, more reliance on video, focus on US High Schools, etc. As I've shown, the Habs are hardly alone and were one of the first to partake in the European exodus in favour of North American prospects. Unfortunately for Habs fans, they failed to execute the paradigm shift with too many inadequate and wasted 1st round picks.

Without doubt, the entire league has backed away from Europe unless a prospect demonstrates a willingness to come over and play in North America before being draft eligible. Trouble is, the number of young prospects eager to try is also in decline.

Talent loss?

When asked about the talent level in today's NHL, most people tend to focus on Russians in general and the KHL in particular. That's too narrow a view to see what's really going on in the grand scheme of things. The NHL isn't losing talent with fringe players or those near the end of their careers going overseas, it’s losing European talent that's no longer being drafted at all.

It's still too early to know if the increased number of North American kids being drafted to fill the void can develop into comparable talent but I can't help but think the NHL is losing out. No doubt it's killed any serious discussion on NHL expansion into Europe and the longer this goes on, the more "out of sight, out of mind" mentality will sink in as the European leagues continue to stabilize and benefit from their home-grown talent staying put. Good for fans overseas, bad for an NHL trying to promote itself as the best league in the world.

Finger pointing

Without question, immigration patterns have affected the game of hockey. Families haven't been emigrating en masse from winter climates within Europe since the 1950s and haven't been arriving in North America since the 1960s. In other words, not for 2 generations. Both continents now depend primarily on Asia and the Middle East to grow their population base and economies while emigration from South America is more specific to the United States.

The result is time-released weak enrollment in hockey due to cultural unfamiliarity and ever-rising costs to get and keep children involved in the sport. While some media and league presidents would like people to believe these are problems unique to them, the reality is that these are global issues affecting the sport as a whole and some countries and leagues are simply handling it better than others.

Bold prediction

Because weak enrollment and financial pressures are global, I don't believe these are a valid arguments to justify the sudden drop-off in Europeans being drafted by NHL teams. Based on the timeline and the numbers, I expect we'll see a sudden and steady increase in the number of Europeans being drafted once a new and equitable PTA (Player Transfer Agreement) is in place. Until then, NHL teams won't risk many if any draft picks on Europeans.